Issuing rights to a company’s existing shareholders to buy a proportional number of additional securities at a given price (usually at a discount) within a fixed period.

A rights issue offers existing shareholders the opportunity to buy new securities at a price lower than their stock exchange price and thereby preserve their relative holding in a company. This is the opposite of the disbursement of a dividend: Instead of the shareholders benefiting from a company’s financial performance, they are digging deeper into their own pockets to help the company.